The Directorate General of GST Intelligence (DGGI) has initiated action against several insurance companies including HDFC Bank, Go Digit Insurance and Policybazaar for allegedly issuing bogus invoices to claim input tax credit without rendering any services. DGGI officials have sent show-cause notices and summons to at least 120 insurance intermediaries and aggregators across the country in the last 15 days, following a year-long probe into theft of Rs 2,250 crore through fake invoicing from 2018 to March 2022 has been detected. to report.
According to a DGGI official, the probe has revealed that insurance companies availed input tax credit without receiving actual goods or services by relying on fake invoices provided by insurance intermediaries. Notices have been sent in response to this search. As per GST law, as per Rule 16 of the CGST Act, 2017, a buyer must have an invoice on which GST has been paid, and has received goods or services to avail input tax credit.
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In addition, the officials revealed that these entities had hatched schemes to transfer ineligible input tax credits as marketing services, and that they generated fraudulent invoices as a means of evading taxes. In a separate case, the tax authorities have also sent notices and summons to insurance companies and tax has been recovered in some cases. According to officials, a total of Rs 700 crore has been recovered from these companies as pre-deposit and summons have been issued to 12 insurance companies by DGGI.
Earlier, DGGI had issued notices to around 10-12 mutual fund houses seeking information about their past transactions. In February, the DGGI accused these mutual funds of improperly claiming input tax credit to reduce their GST liability by booking specific expenses in 2017-18, which is in violation of the mandatory accounting practices for expenses. which was not aligned with the limit of 2.25 per cent. Assets Under Management (AUM) by Asset Management Companies.
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